Issue 25

Budget Study Centre Issue 25
Oct 11, 2018


Fortnightly Budget News Alerts


Trade deficit narrows to $8.869bln in July-September

The News (Oct 11, 2018)

KARACHI: Trade deficit narrowed 1.61 percent to $8.869 billion in the first quarter of the current fiscal year of 2018/19 as regulatory duties snipped non-essential imports into country, analysts said on Wednesday. Pakistan Bureau of Statistics (PBS) data showed that trade deficit was registered at $9.014 billion in the corresponding quarter a year earlier. Merchandise exports rose 4.56 percent to $5.39 billion, while imports inched up 0.63 percent to $14.26 billion ….Read More


IMF, Pakistan to meet as Islamabad seeks bailout

The News (Oct 11, 2018)

NUSA DUA, INDONESIA: IMF chief Christine Lagarde said she would meet with Pakistani officials on Thursday, with expectations that Islamabad will request a bailout of its shaky economy. Pakistani Finance minister Asad Umar, who is attending the fund’s annual meeting in Bali, announced earlier this week that the government would seek talks with the IMF on a "stabilisation recovery programme". Lagarde said the IMF was yet to receive anything ….Read More


In US-China trade war, Pakistan gets extra export orders

The Express Tribune (Oct 11, 2018)

FAISALABAD: The present tense relations between the US and China have proved to be a blessing in disguise for Pakistan as its exporters are getting extra orders from the US in the prevailing circumstances, said Faisalabad Chamber of Commerce and Industry (FCCI) President Syed Zia Alumdar Hussain. Speaking to trainees of the Pakistan Institute of Trade and Development (PITAD) at the FCCI, Hussain said Faisalabad was a main ….Read More


Govt urged to adopt Taxpayers’ bill of Rights

The News (Oct 10, 2018)

ISLAMABAD: The federal government needs to start implementation of economic reform agenda by adopting Taxpayers’ Bill of Rights. The said bill clearly describes the taxpayers’ rights, the mechanism which will ensure the protection of these rights and possible remedy if taxpayers’ rights are violated or infringed upon. According to a press release issued on Tuesday, Centre for Peace and Development Initiatives (CPDI) urged the federal government ….Read More


Pakistan among economies most vulnerable to refinancing risks

The News (Oct 10, 2018)

LONDON: Sri Lanka, Armenia and Pakistan top the list of smaller emerging economies most vulnerable to refinancing risks, because they face a combination of large upcoming repayments and low foreign currency reserves, ratings agency Moody’s said on Wednesday. Emerging-market governments embarked on an issuance spree in recent years, taking advantage of record-low interest rates and major central banks that were pumping ….Read More


UK economy grows faster than expected in three months to August

The Independent (Oct 10, 2018)

UK GDP growth was stronger than expected in the three months to August thanks to the summer heatwave, official data on Wednesday showed. The economy expanded by 0.7 per cent over the three months, according to the latest estimate from the Office for National Statistics. That was higher than the 0.6 per cent consensus among City analysts. The three month growth rate for July was also revised up to 0.7 per cent, from 0.6 per cent previously. “The economy ….Read More


Record rupee devaluation pushes total debt & liabilities to shoot up by Rs900 billion

The Pakistan Today (Oct 10, 2018)

ISLAMABAD: The record 7.5 percent depreciation of the rupee on Tuesday has contributed to Pakistan’s total debt and liabilities to shoot up solely by around Rs900 billion and Rs1.4 trillion since August. The central bank on Tuesday allowed the rupee to be devalued by around Rs9.50 against the dollar in line with IMF suggestions signalling the government’s intent to completing prerequisites before it secures another bailout programme, reports Dawn. ….Read More


IMF warns Pakistan against ‘excessive loans’ from China

The Dawn (Oct 10, 2018)

NUSA DUA: Pakistan has not yet formally approached the International Monetary Fund for financial assistance, but if bailout talks get underway this week, the goal will be to help Pakistan reach its full potential, the IMF’s chief economist said on Tuesday. Addressing a news conference at the IMF and World Bank annual meetings in Bali, the IMF’s Maurice Obstfeld cautioned that increased Chinese involvement in Pakistan’s economy could bring both ….Read More


Pakistan’s debt sustainability indicators in disarray

The Express Tribune (Oct 10, 2018)

ISLAMABAD: Pakistan’s all debt sustainability indicators have turned topsy-turvy in the last fiscal year, suggesting that the country faces serious challenges to foreign debt repayment and is also exposed to high refinancing risks due to a short debt maturity period. The Public Debt Management Risk Report of June 2018, released by the Ministry of Finance, showed that most of the indicators moved further towards dangerous levels while three… Read More

IMF warns Italy not to breach EU spending rules in next budget

The Guardians (Oct 09, 2018)

The International Monetary Fund has thrown its weight behind Brussels in its battle with Italy’s coalition government over plans to increase the indebted country’s borrowing in its next budget. The Washington-based lender of last resort, which is holding its annual conference in Bali this week, warned Rome to abide by the EU’s financial rulebook or risk a rebellion by investors that could trigger a debt default. Italy’s populist coalition is targeting a …Read More

Trump’s tariffs will harm growth in 2019, IMF predicts

The Washington Post (Oct 08, 2018)

The International Monetary Fund has cut its U.S. growth forecast for next year, warning that President Trump’s protectionist trade policies will harm growth domestically and around the world. In its World Economic Outlook, released Monday evening, the IMF says the U.S. economy is expected to grow 2.9 percent this year and 2.5 percent next year. The organization had forecast in April that the U.S. economy would grow 2.7 percent in 2019. “If you.…Read More


US economists win Nobel prize for work on climate and growth

The Guardian (Oct 08, 2018)

Two American economists at the forefront of work on climate change and the role of governments in boosting growth have been jointly awarded the prestigious Nobel Memorial prize for economics. The Royal Swedish Academy of Sciences said William Nordhaus and Paul Romer were being honoured for their research into two of the most “basic and pressing” economic issues of the age. Nordhaus made his name by warning policymakers.…Read More


Pakistan knocks at IMF door to void default

The Express Tribune (Oct 08, 2018)

ISLAMABAD: After weeks of dilly-dallying, Pakistan on Monday announced approaching the International Monetary Fund (IMF) for a bailout package aimed at avoiding default on international debt obligations and restoring confidence among the investors. “After taking into account the current situation and consultation with leading economists, the government has decided to approach the IMF for a bailout programme,” announced Finance Minister Asad Umar through a recorded video message.…Read More


Consumers brace for higher inflation in FY19

The Express Tribune (Oct 07, 2018

KARACHI: Pakistan is on a path of high inflation following the government’s decision to revise gas prices upwards for domestic consumers and other sectors of the economy, like fertiliser, cement and CNG fuel. Experts are on the same page as they expect an uptrend in inflation and slowdown in economic growth during the current fiscal year 2018-19. Preliminary assessment of a securities brokerage house suggests inflation may soon soar to double …Read More


Pakistan confronted by difficult economic situation: IMF

The Pakistan Today (Oct 05, 2018)

LAHORE: The International Monetary Fund (IMF) team concluded its week-long visit on Thursday and issued a report stating Pakistan was confronted by a difficult economic situation, with high fiscal and current account deficits and low foreign exchange reserves. The IMF delegation was led by its Washington-based mission chief Harald Finger and over a week-long visit discussed the country’s economic situation and exchanged views on necessary …Read More


Passage of mini-budget: A testing time for PTI govt is over

The News (Oct 04, 2018)

ISLAMABAD: Running into their second eventful month in power laden with unlimited political rhetoric, the PTI government must be feeling relieved cutting the 2018-19 PML-N budget according to its needs. But the forced patch work in budget still doesn’t give even a feel, glimpse of ruling party’s election manifesto and economic vision. Perhaps, delayed temporarily? Till then, the fast track “tabddeli” (change) is on hold. Got paused — to be more appropriate. .…Read More


Thar Energy gets $3.9 million investment from Chinese firm

The Express Tribune (Oct 04, 2018)

KARACHI: China Machinery Engineering Corporation (CMEC) has acquired a 10% stake by investing $3.9 million in Hub Power Company’s (Hubco) subsidiary Thar Energy Limited (TEL) – one of the first domestic coal-fired power projects at Thar coal block-II. With majority shareholding of about 60% in the project, Hubco has established TEL for setting up a 330-megawatt mine-mouth lignite-fire The company has signed a shareholders’ agreement with .…Read More


World economy at risk of another financial crash, sys IMF

The Guardian (Oct 03, 2018)

The world economy is at risk of another financial meltdown, following the failure of governments and regulators to push through all the reformsneeded to protect the system from reckless behaviour, the International Monetary Fund has warned. With global debt levels well above those at the time of the last crash in 2008, the risk remains that unregulated parts of the financial system could trigger a global panic, the …Read More


Pakistan needs to raise $20b to avoid payment crisis

The Express Tribune (Oct 03, 2018)

DUBAI: Pakistan has to initiate bailout talks with the International Monetary Fund (IMF) in addition to seeking investment from friendly countries. It needs to arrange a massive amount of up to $20 billion instantly to avoid foreign payment crisis. “No one party appears to be willing to provide the entire amount ($18-20 billion) required to run the country in the current fiscal year 2019,” said Citi Head of Public Sector, Middle East, Pakistan & Levant, Head.…Read More


Power sector losses of Rs200b to be recovered from defaulters

The Express Tribune (Oct 04, 2018)

ISLAMABAD: The country’s economic managers are looking to recover a loss of Rs200 billion from power-sector defaulters and bring down the overall loss to 16.3%, as allowed by the regulator. It turned down the Power Division’s plea to pass on the Rs200-billion loss on account of electricity theft to honest consumers which were paying their bills regularly. Officials revealed that Finance Minister Asad Umar, while chairing a recent meeting of the.…Read More


FBR goes after 169 wealth non-filers, many more set to face hot pursuit

The Express Tribune (Oct 2, 2018)

ISLAMABAD: In a large swoop to widen the tax net and ensure tax compliance across the country, Federal Board of Revenue (FBR) has started a massive drive for the recovery of taxes from big and influential tax evaders. The crackdown on the high-value targets has been launched on the instruction of Federal Minister for Finance, Revenue and Economic Affairs, Asad Umar as part of the government’s efforts to widen the tax net and bring in it all those individual.…Read More


Italian deputy PM threatens to sue EU boss over budget criticism

The Guardian (Oct 02, 2018)

The Italian deputy prime minister, Matteo Salvini, has threatened to sue Jean-Claude Juncker for damages, accusing the EU president of pushing up Rome’s cost of borrowing by likening Italy to Greece. Salvini, who is also Italy’s interior minister and leader of the far-right League party, was speaking after Juncker’s comments helped send the yield on Italian benchmark bonds to a four-and-a-half year high of 3.4%, while shares in Italian banks plunged. …Read More


Budget 2018: What can we expect from chancellor Philip Hammond’s budget this month?

The Independent by Caitlin Morrison (Oct 02, 2018)

Philip Hammond will deliver his 2018 Budget at the end of October, and with Brexit negotiations looming, there is more uncertainty than ever surrounding the state of the UK economy. The Budget falls earlier than usual this year because of the need to clarify tax, spending and other financial decisions, before a final Brexit deal can be reached with the EU. The chancellor will update the country on economic matters just 10 days after the next EU summit, but …Read More


Pakistan assures IMF of increase in tax collection

The Express Tribune (Oct 02, 2018)

ISLAMABAD: Amid a decline in revenues, Pakistan has assured the International Monetary Fund (IMF) that its tax collection will soon get a boost as it has planned to utilise information being received under multilateral tax conventions and will also give a push to cases under litigation. The government has decided to include Saudi Arabia in the list of countries where Pakistanis have undeclared assets which have not been disclosed to the Federal Board .…Read More


Core inflation jumps to four-year high at 8%

The Express Tribune (Oct 01, 2018)

ISLAMABAD: Core inflation jumped 8% in September 2018 – the highest level in the past four years, which was slightly lower than the key interest rate, indicating inflationary pressures that were affecting prices of almost every household item.

Core inflation – which excludes volatile food and energy prices – went up from 7.7% in August to 8% in September, reported the Pakistan Bureau of Statistics (PBS) on Monday…Read More


Recovery of bad debts can help boost economy

The Express Tribune (Oct 01, 2018)

ISLAMABAD: Financial institutions of a country are very important. Fiscal strength of these institutions determines the strength of the economy. However, just like other institutions in Pakistan, previous governments failed to pay attention to their improvement. Now, the responsibility is on the new Pakistan Tehreek-e-Insaf (PTI)-led administration, which has so far remained undecided about how to handle financials of the country.…Read More


DN presents over Rs8bn 2018-19 budget for DI Khan

The Business Recorder (Oct 01, 2018)

DIKHAN: District Nazim Dera Ismail Khan Nawabzada Azizullah Alizai here Monday presented 4th annual budget of the district government for fiscal year 2018-19 amounting Rs8,356,058,000 and also got approved the revised budget for 2017-18 from District Council. Addressing on the occasion Azizullah Alizai said that in budget 2018-19, Rs410,700,000 has been allocated for developmental schemes, Rs619,657,000 for non-….. …Read More


IMF calls to ‘reinvigorate’ trade in face of economic war between US and China

The Telegraph (Sep 30, 2018)

Radical reforms to open up trade in services, online commerce and cross-border investment could give the world economy a major boost over the coming years, if Governments choose to seize the opportunity. The International Monetary Fund is launching a new campaign to stop the trade war and encourage nations to rediscover the benefits of trade, in the face of higher tariffs and anti-trade rhetoric, particularly as the US builds barriers…Read More


India’s economy overtake UK, Germany, France and Japan in the next decade, predicts HSBC

The Telegraph (Sep 30, 2018)

India will be the fastest growing big economy of the next decade, leapfrogging the UK, Germany, France and ­Japan to become the third biggest in the world, according to new forecasts. Economists at HSBC said the world’s largest democracy will grow at more than 6pc per year on average over the coming decade. By contrast growth in China is expected to slow to below 5pc per year in the late 2020s.…Read More


State Bank of Pakistan increases interest rate to 8.5% in new monetary policy

Daily Pakistan Global (Sep 30, 2018)

ISLAMABAD – The State Bank of Pakistan has increased the key interest rate by hundred basis points. In a monetary policy statement on Saturday, the Central Bank said the new interest rate will be 8.5 percent. The rate will be effective from Monday (1st October 2018) for the next two months in order to further consolidate efforts required to ensure macroeconomic stability, the statement added. The central bank said that though political uncertainty …Read More


Italy budget uncertainty returns to haunt Europe

The Times of Malta (Sep 28, 2018)

Europe’s share markets and the euro both took a tumble yesterday as reports that Italy’s long-awaited budget was facing a delay compounded an already groggy globalmood after the third US interest rate rise of the year. Italy’s main Milan bourse slumped as much as two per cent with the country’s big banks down even more as the country’s borrowing costs also hit a three-week high in the government bond markets. Investors have.…Read More


Investors dump Italian bonds after ministers agree ‘budget for change’

The Times of Malta (Sep 28, 2018)

Italian government bonds were set for their worst day in over three months after key Italian government officials agreed a budget overnight that will see the country run a deficit in 2019 and beyond. Italy’s government on Thursday targeted the budget deficit at 2.4% of gross domestic product for the next three years, defying Brussels and marking a victory for party chiefs over Economy Minister Giovanni Tria, an unaffiliated technocrat. "There is an .…Read More